As previously noted, ‘atypical’ assets provide both potential rewards, i.e. monetary / personal, and hassle factors, i.e. cost / space / time.
Main pros include limited supply, tradability, brand reputation, and portability. Main cons include storage issues, appraisal and insurance costs, plus condition and packaging.
Based on articles from “Advisor’s Edge” magazine, here are factors and statistics concerning a few lesser known asset types:
- Potential issue of holding smaller stones of better quality versus bigger stones of lesser quality
- PROS include that pieces are limited outside private collections, stones are finite, tangible
- CONS include that diamonds, pearls, etc. can attract grease or become dull or be fragile
- Some bottles can be worth more than 100 times the original price, especially with European vintages
- PROS include finite amounts per vintage, option to invest in wine Funds
- CONS include need for temperature security, expensive storage
- Values can reach over $2 million, with Asia currently the hottest market
- PROS include immunity of investment class to fashion and economic cycles
- CONS include fakes, periodic servicing, need for condition and service records, insurance
- Limited batches can take up to 25 years to mature
- PROS include easier storage than wine, brand strength limits price volatility
- CONS include liquidity, storage, evaporation and colour fading with older bottles, fakes
Larger, less common collectibles will be featured in Part 6.